by Phil Doel
29. July 2011 01:20
The results season is in full swing and most companies are largely in line with expectations. However, we are beginning to see some modest downgrades to expectations for 2012, but that is largely to be expected at this stage of the cycle.
The downgrades are being driven by a squeeze on margins from increased costs and investment, though the latter should in most cases be regarded as a long-term positive. We currently see no reason to change to our growth expectations, but feel that the market may be expecting a bit too much at the moment.
That said, as an income manger, strong corporate results means I am bullish on the outlook for dividends.
Looking beyond the US’s budgetary issues, which I expect to go right to wire and possible a little beyond before resolution, I have begun to build a holding in Schroders. I feel that once the current headwinds abate the market will be in a much better position and Schroders is a potential beneficiary from a broad market rise.
I’ve sold Northumbrian Water now that the bid is in place as it’s effectively ‘dead money’ and can be better used elsewhere. We are not expecting a counter bid.
